Patricia Is a Business Owner Who Is Trying to Determine

question 89

Multiple Choice

Patricia is a business owner who is trying to determine her cost of goods sold for the current year. She bought 20 units of inventory at $11, then 26 units at $10, and finally 18 units at $14. She sold 30 units at an average price of $16 per unit during the current year and uses FIFO for her inventory valuation. What was her cost of goods sold in the current year, assuming that there was no inventory at the beginning of the year?

• A)$320
• B)$330
• C)$480
• D)$732
• E)None of these

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Definitions:

Real Option

The opportunity to undertake certain business initiatives, such as deferring, abandoning, expanding, or contracting a project, based on future events.

Underlying Asset

A financial asset or instrument upon which a derivative’s price is based, including stocks, bonds, commodities, or currencies.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock or other asset at a specified price within a certain period.

Put Option

A financial contract giving the option buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified timeframe.